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Tax reform veto creates uncertainty over PEZA perks

THE Department of Trade and Industry (DTI) said there is uncertainty over whether firms registered with the Philippine Economic Zone Authority (PEZA) will keep their value-added tax (VAT) exemptions after Malacañang vetoed provisions of the first package of the Tax Reform for Acceleration and Inclusion (TRAIN) law.

This was after PEZA reasoned that the TRAIN will not repeal the PEZA law –  which states that its economic zones are operated and managed as a separate customs territory – and was quoted in a Supreme Court decision but DTI still held its reservations.

“The supreme court decision is based on the laws that we have— the tax code and the PEZA. But the TRAIN package one, it’s also a law so it precedes all that is inconsistent but the supreme court law – the decision, is all this that is that was preceded,” Trade undersecretary for Industry Development Group Ceferino S. Rodolfo said in an earlier press briefing.

President Rodrigo R. Duterte in December vetoed five TRAIN provisions including the zero-rating on the sale of goods and services that cross separate customs territories and tourism enterprise zones, noting that the provision violates “the principle of limiting VAT zero-rating to direct exporters.”

Mr. Duterte noted in his veto that when goods or services cross separate customs territories without being taxed, it will lead to “leakages” in the tax system, which will defeat the TRAIN’s goal of making the tax process simpler and more efficient.

PEZA, an agency under DTI, gives fiscal and non-fiscal perks to certain commercial activities such as export-based manufacturing industries as well as business process outsourcing and knowledge process outsourcing businesses in economic zones.

In a briefing on Dec. 29, PEZA Director General Charito B. Plaza argued that “there are many interpretations of the veto of the President,” giving PEZA leeway to maintain its interpretation, effectively preserving the status quo.

In a dispute involving the Omnibus Investments Code, “there is a Supreme Court decision [which exempts PEZA]. If they’re going to implement otherwise, then that’s when we’re going to fight back because of the Supreme Court decision. But we’ll see,” she added.

PEZA’s Deputy General for Operations Mary Harriet O. Abordo argued that TRAIN does not change the fact that PEZA’s economic zones are considered foreign soil and will not be affected due to the cross-border doctrine.

Troops seize 9 firearms from warring clans to stop ‘rido’

SOLDIERS OF the Joint Task Force Zampelan, mobilized in the wake of a clan war in Lanao del Sur, seized nine assorted firearms after a clearing operation early Saturday morning (Jan. 6), the Western Mindanao Command (WestMinCom) reported. Military units were first deployed Friday afternoon to Barangay Madanding, Bacolod Kalawi town, when two warring factions from the Amanodin and Dipatuan clans of the same village engaged in a firefight, temporarily disrupting the flow of traffic along the highway. — News5/interaksyon.com

No other sister team, please

Half of the members in the PBA are already composed of sister teams. Two groups have three teams apiece that independent teams were having a difficult time winning a championship.

San Miguel Corp., with Ramon S. Ang, having the controlling shares, has San Miguel Beer, Barangay Ginebra and Magnolia Chicken on its stable.

Manuel V. Pangilinan, a telecommunications tycoon, also has three teams being bankrolled — Talk ’N Text, Meralco and NLEX.

This leaves the other half of the cast as the only independent squads.

It came as a big sigh of relief when Phoenix’s planned acquisition of Kia didn’t push through.

A statement was issued by Phoenix Petroleum on the Philippine Stock Exchange squelched early reports that the growing petroleum company is about to take over Columbian Autocars, distributor of Kia in the Philippines.

Had the deal got consummated, the PBA will have another version of sister teams in play, one that could change the landscape of a league that has been already embroiled with a series of controversies, including the most crucial one — losing a PBA Commissioner.

Sources from Phoenix, on the condition of anonymity, told BusinessWorld that there were plans on acquiring Kia, but the deal didn’t push through.

“We’ve been trying that even before the PBA Rookie Draft started. Had the deal push through, we would have already secured the rights on (Christian) Standhardinger,” said one of the sources.

Another source disclosed that Phoenix made a series of due diligence before deciding not to push through with the deal. Such incidents happened in the past as we saw companies, which already agreed in principle, backing out at the last minute.

The Campos Group, which owns Century Tuna, was supposed to take over Purefoods, but backed out at the last minute after making its due diligence.

A potential partnership between Mikee Romero and Harbour Centre and Manuel V. Pangilinan was also quashed at the last minute.

For now, Phoenix Fuel has maintained its independence and that’s good news for the PBA.

The PBA is on its survival phase and seeing new teams owning multiple franchises isn’t healthy anymore for the league.

 

Rey Joble has been covering the PBA games for more than a decade. He is a member of the PBA Press Corps and Philippine Sportswriters Association.

reyjoble09@gmail.com

BBL battle points

A MORE demanding version.

That is how Institute for Political and Electoral Reform Executive Director Ramon C. Casiple describes the revised Bangsamoro Basic Law (BBL) filed in the current Congress.

“Mas matigas ang BBL na ito kaysa sa original BBL,” he said in an interview, referring to expanded or additional provisions that he called “controversial constitutionally.”

TERRITORY
Maki T. Datu-Ramos II, a former public lawyer who has gone into private practice and has worked as a legal consultant of one of the commissioners of the Bangsamoro Transition Commission, said among the “contentious issues will be the territorial expansion” of the Autonomous Region in Muslim Mindanao (ARMM) through a plebiscite.

“That would be constitutionally problematic because mother territories from respective LGUs (local government units) where constituents or officials of barangays, municipalities or cities subject for plebiscite might raise a constitutional issue before the Supreme Court,” said Mr. Ramos, a Maranao from Lanao del Sur, one of the ARMM provinces.

Article III of the proposed BBL covers provisions on “Territory”, which is defined as “the land mass as well as the maritime, terrestrial, fluvial and alluvial domains, and the aerial domain above it.”

It also clearly states that: “The Bangsamoro territory shall remain a part of the Philippines.”

The “Core Territory” would include the existing geographical area of the ARMM, plus the following:

  • Municipalities of Baloi, Munai, Nunungan, Pantar, Tagoloan and Tangkal in the province of Lanao del Norte, which is currently part of the Caraga Region;
  • All other barangays in the municipalities of Kabacan, Carmen, Aleosan, Pigkawayan, Pikit, and Midsayap that voted for inclusion in the ARMM during the 2001 plebiscite (these municipalities are under Cotabato, which is under the SOCCSKSARGEN Region);
  • Cotabato City, which is geographically within Maguindanao under the ARMM, but is administratively under SOCCSKSARGEN (the ARMM regional government complex is located in Cotabato City);
  • Isabela City, which is within the island province of Basilan under ARMM, but is administratively under the Zamboanga Peninsula Region; and
  • All other contiguous areas where there is resolution of the local government unit or a petition of at least ten percent (10%) of the registered voters in the area asking for their inclusion at least two months prior to the conduct of the ratification of the BBL and the process of delimitation of the Bangsamoro.

The draft BBL also opens “contiguous provinces, cities, municipalities, barangays, and geographic areas, other than those mentioned in the preceding Section, that obtain majority of the qualified votes cast in the periodic plebiscites, as provided under Article XV, Section 4, of this Basic Law shall become part of the Bangsamoro.”

EXCLUSIVE POWERS
Mr. Ramos also points to the provisions on “exclusive powers”, which he said are not mentioned specifically under the 1987 Constitution.

Article V covers the “Powers of Government.”

The Philippine government, referred to as the “Central Government”, would  retain authority over nine areas, including defense and external security, foreign policy; monetary policy; postal service; citizenship and naturalization; immigration; intellectual property rights; customs and tariff as qualified by Section 2(10), Article V of the BBL; and common market and global trade, but the power to enter into economic agreements given to the ARMM under Republic 9054 would be transferred to the new Bangsamoro government.

Shared authority between the Bangsamoro and Central governments would include land registration, social security and pension, and human rights and humanitarian protection, among other things.

On the other hand,  the Bangsamoro government would have “exclusive powers” over 58 items, covering much of economic activities, expropriation and eminent domain, social services, and development planning.

POLICE
Mr. Casiple, meanwhile, cites the establishment of a Bangsamoro police force as an expected point of contention.

Article XI covers “Public Order and Safety” and Section 2 provides for the creation of the “Bangsamoro Police, which shall be organized, maintained, supervised, and utilized for the primary purpose of law enforcement and maintenance of peace and order in the Bangsamoro.”

The section does qualify that “It shall be part of the Philippine National Police” and that “It shall be responsible both to the Central Government and the Bangsamoro Government, and to the communities it serves.”

Mr. Casiple forecasts that the BBL “will be passed”.

“But not in its original form,” he added. The question then, he said, is “will the MILF accept what will be passed?”

Time will tell, opines Mr. Ramos. “We can only see what will happen if BBL is passed and implemented in the future. Every people in Mindanao and ARMM want peace. We are all tired of endless wars.” — Arjay L. Balinbin and Rosemarie A. Zamora

The luxury sneakers only you can buy

AS AN alternative to customers lining up at sneaker stores fighting for the chance to buy a designer shoe that only a few people have, Mark Gainor and Jimmy Gorecki are offering something even more exclusive: a kick designed for you, and you alone.

Gainor, the former creative director of Native Shoes, and Gorecki, a onetime pro skateboarder, founded No.One in February 2017 in Venice, California. The luxury start-up creates custom-made and extremely limited-edition sneakers using traditional shoemaking techniques. No.One employs a crew of four cobblers in the company’s small studio — a size that allows for creative flexibility and attention to bespoke commissions, which in recent months have included sneakers made from impala fur, as well as a waterproof pair reconstructed from a Gore-Tex military jacket. Gainor and Gorecki have found fans among a steady flow of actors, musicians, and sports icons, including 2017 NBA Finals MVP Kevin Durant.

Alongside these unique creations, the team also works on small batches of production-run models, producing from 14 to 17 pairs in three classic silhouettes, with prices starting at $575 a pair. The process of creating each run takes roughly two weeks, and with each release, typically only a couple of pairs in each size are made available.

“To us, No.One is very much a post-skateboarding shoe,” says Gainor. “Not only in the physical sense, but in the larger sense of finding a home and platform for the DIY values and culture from growing up in skateboarding.”

In a sneaker market so focused on high-tech fabrics, and new and innovative manufacturing processes, the idea of a handcrafted, customized sneaker stands out. Each pair of No.One sneakers is hand-lasted, a process that’s identical to what John Lobb or any other classic bespoke shoemaker would use — and one that can’t be rivaled by more modern, mass-production slip lasting or machine lasting.

No.One sneakers 2
HTTPS://NO-ONE.LA/

For its premium materials, No.One works with a small group of luxury tanneries, each specialized in a specific product, and most often family owned. For its sneaker linings, plongé lambskin is sourced from a Chanel-owned tannery in the south of France — the same skin that lines many of the luxury brand’s handbags.

Gainor points to the leather counters (a piece near the heel) as indicative of the attention to detail that ensures a pair of No.Ones will long outlast any trendy pair of Yeezys exposed to the same amount of wear. “These leather supports are never seen, but we hand-cut, hand-skive, and wet-mold them out of Italian vegetable-tanned leather,” he says. “That’s hours of detailed craft for each pair of shoes for something that will never be seen, but will be felt for the life of the sneaker.”

So far the brand has created three distinct silhouettes — the Alpha desert boot, the Bravo low sneaker, and most recently the cap-toed Charlie. No.One’s plan is to create a comprehensive line that runs 26 models strong, one for each letter of the alphabet, while still satisfying the ever-growing demand for fully customized service.

WWD fashion director Alex Badia says No.One has figured out how to sell a personalized experience to consumers who’ve grown tired of settling for the immediacy of an off-the-shelf purchase. “The modern menswear consumer has become much more savvy in recent years,” she says. “We’re seeing a growing appreciation for the process that comes with commissioning bespoke fashion, and a better understanding of the time and costs involved.” — Bloomberg

Road network program pushed

THE PROVINCIAL government of Davao Oriental has set up a five-year P2.1-billion road network development plan covering 129.6 kilometers and aimed at providing access both to farm products as well as tourism sites. The provincial government said it will tap the national government as among the sources of the funding, including the Department of Interior and Local Government through its conditional matching grant for provinces for road rehabilitation and improvement. The provincial government also said the plan, as already approved by the Provincial Development Council, will have 16 road sections and is part of the Provincial Development Physical Framework Plan 2018-2022. The project also serves as a civic component of counter-insurgency efforts. The province has been among the few deemed by the military as peace and development areas. Governor Nelson L. Dayanghirang said his goal is to increase farm production by about 10% during the period covered by the framework. The total farming area is 97% of its alienable and disposable land, based on the Philippine Statistics Authority data. The project is also aimed at boosting the provincial government’s program of promoting the province’s about 200 tourist attractions and improving on last year’s estimated 700,000 tourist arrivals. — Carmelito Q. Francisco

Why Trump is probably to blame for the weak dollar

By Leonid Bershidsky

PRESIDENT Donald Trump keeps bragging about the stock index gains since his election. He did so again on Friday, claiming he’d helped create “six trillion dollars in value.” Be that as it may, it’s also likely that Trump is at least partially responsible for the dollar’s weak performance in 2017, which, from an international perspective, wiped out much of that “value.”

Last year, the US dollar lost 10% against the euro and 5.5% against the renminbi. It was the second worst performer among major currencies after the New Zealand dollar, and its drop was the steepest in more than a decade despite three interest rate hikes and the passage of Trump’s tax reform, which could logically be expected to drive the dollar’s value upward. This happened for a complex set of reasons which may include the dollar’s popularity as a funding tool for foreign companies and governments, but Trumps’s effect on his country’s global standing must be a key driver of the dollar’s decline.

In a 2017 paper, Barry Eichengreen of the University of California, Berkeley, and Arnaud Mehl and Livia Chitu of the European Central Bank developed a “Mercury and Mars” hypothesis about the value of reserve currencies. They wrote that there are two sides to a currency’s appeal. The Mercury side is economic: It’s all about safety, liquidity, network effects, and economic connections. The Mars side is geopolitical: It reflects the issuing country’s strategic, diplomatic, and military power.

The researchers attempted to quantify this duality by looking at the composition of nations’ currency reserves. They found that as long ago as between 1890 and 1913, countries were more likely to hold reserves in the currencies of their defense pact partners, even when purely economic choice would have dictated otherwise. The same is still true, with a nuclear-era twist. Nations such as Japan and South Korea, dependent on the US for security, hold a greater share of reserves in dollars than France, Russia, or China, which possess their own nuclear deterrent. Eichengreen, Mehl and Chitu developed a model to predict the composition of countries’ foreign reserves with and without the “Mars effect” and found that for America’s security dependents, the actual share of dollar holdings was always higher than the model’s highest predictions.

Eichengreen and collaborators argued that the dollar’s “security premium” accounts for a significant part of its attractiveness as a reserve currency. Losing it would mean a 30 percentage point reduction in the share of US currency in nations’ reserves. Isolationist “America First” policies would certainly seem to undermine the “security premium.” Eichengreen, Mehl and Chitu wrote:

The dollar’s dominance as an international unit is buttressed by the country’s role as a global power guaranteeing the security of allied nations. If that role were seen as less sure and that security guarantee as less ironclad, because the US was disengaging from global geopolitics in favor of more stand-alone, inward-looking policies, the security premium enjoyed by the US dollar could diminish. Our estimates suggest, in this scenario, that $750 billion worth of official US dollar-denominated assets — equivalent to 5% of US marketable public debt — would be liquidated and invested into other currencies such as the yen, the euro, or the renminbi.

All year, the Trump administration has blown hot and cold on its commitment to alliances, to the point that any assurances it makes today can’t be taken at face value. Trump’s quick temper and his willingness to play the “whose nuclear button is bigger” game haven’t helped bolster the US reputation as a security guarantor. The constant leaks pointing to Trump’s incompetence, such as the new Michael Wolff book, appropriately titled “Fire and Fury,” also detract from the dollar’s reputation as a safe asset.

No wonder its share of global foreign exchange reserves, as reported to the International Monetary Fund, stood by the end of the third quarter of 2017 at the lowest level since the middle of 2014. It declined throughout the first three quarters of last year.

That share still stands at 63.5%, dwarfing other reserve currencies. Central banks hold $6.13 trillion. It would take many years or even more drastic shake-ups to destroy both the “Mercury” and the “Mars” advantages of the US juggernaut. But the slight shift in favor of other currencies reflects a perception that making bigger bets on the US might be unsafe. That’s likely one of the motives behind other reserve currencies’ exchange rate gains relative to the dollar.

Trump, of course, has spoken out in favor of a weak dollar because it helps trade competitiveness. But the US currency is not weakening because of any consistent policy. On the contrary, it’s Trump’s loose cannon behavior that’s undermining it. An unhinged Mars is beating up Mercury in a fit of fire and fury.

 

BLOOMBERG

Curry lifts Warriors over Clippers

The Clippers were toast even before they trekked to the court. Having just lost to the Thunder at the Staples Center, they sought to do better in yesterday’s homestand and, in the process, reclaim the momentum they rode on in stringing together four victories through the New Year. Unfortunately, they were up against the Warriors, dangerous at any time and much deadlier in light of the sharp showing of offensive spark Stephen Curry. And so pundits penciled yet another loss for them.

True enough, the outcome mimicked conventional wisdom’s prognosis. Curry toyed with the Clippers’ guard-devoid roster, unleashing a torrent of points early on and allowing the Warriors to coast the rest of the way. And to add injury to insult, both literally and figuratively, All-Star Blake Griffin exited for good in the first quarter due to a concussion; the development left Doc Rivers with only DeAndre Jordan to parade as a member of the original starting unit.

Even if Griffin were able to suit up until the final buzzer, though, odds are that the Clippers would still have walked off with a loss. These days, the Warriors are virtually unstoppable; even at nowhere close to their best, they require the opposition to product nothing but he finest brand of hoops to get a sniff of success. As it was, they were humming, with Curry summoning the form that enabled him to take two straight Most Valuable Player awards. Teammate Kevin Durant gets more ink, but advanced stats underscore his otherworldly capacity to take over a match, just as he did yesterday.

The Clippers will keep battling, of course; if nothing else, grit is what characterizes Rivers-led teams. And through their persistence, they may yet book a seat to the playoffs. Should they do so, however, they would do well to prepare for more of what they got yesterday. They’ll be fodder for the Warriors, who keep chugging along and proving that all others are simply playing for second.

 

Anthony L. Cuaycong has been writing Courtside since BusinessWorld introduced a Sports section in 1994. He is the Senior Vice-President and General Manager of Basic Energy Corp.

A president at war

By the Mindanao Bureau

EVEN BEFORE President Rodrigo R. Duterte was officially sworn into office on June 30, 2016, his appointed peace negotiators flew to Oslo, Norway to meet with the leaders of the country’s longstanding communist movement.

The informal talks on June 14-15 — attended by Presidential Peace Adviser Jesus G. Dureza and Labor Secretary Silvestre H. Bello III on the government side; and Communist Party of the Philippines (CPP) founder Jose Maria Sison, then National Democratic Front of the Philippines (NDFP) negotiating panel head Luis Jalandoni, and then NDFP spokesperson Fidel Agcaoili — was hailed as a major stride with everyone going home bearing a commitment to pursue formal negotiations once Mr. Duterte got settled in Malacañang.

After the first day of the informal meeting, Mr. Dureza, a veteran negotiator having held the same post under the Arroyo administration and earlier led talks with the Moro Islamic Liberation Front, posted on his social media page that there was “shared optimism” on both sides.

The optimism largely hinged on the Duterte factor: Someone whom the exiled Mr. Sison considered an ally, calling him the “first Left president of the Philippines” in a video message to the Peace Forum held in Davao City on June 28, 2016.

Less than a year later, after four rounds of formal talks that also saw the release of at least 20 NDFP consultants and political prisoners, an on-then-off unilateral ceasefire declarations, and the signing of an agreement that was considered a step away from a formal joint ceasefire deal, Mr. Duterte told his panel to pull out of the peace table on the eve of 5th round of negotiations on May 27.

The trigger point was rooted in the declaration of martial law in Mindanao when the Marawi crisis erupted on May 23.

Mr. Agcaoili, who by then has assumed chairmanship of the NDFP panel, said the CPP’s order to the New People’s Army (NPA), its armed wing, to step up attacks was a response to the military’s intensified offensives and “widespread human rights violations preceding and following the declaration of martial law in the whole of Mindanao.”

The CPP order was later taken back, but the government demanded that the CPP put the recall in official writing, which was not granted.

It did not help any that Mr. Sison, from his place of exile in the Netherlands, and his former university student, Mr. Duterte in the palace, engaged in a nasty word war that went as far as tirades on health conditions and mental incapabilities.

“It’s not the end (of the peace process),” Institute for Political and Electoral Reform Executive Director Ramon C. Casiple, speaking in Filipino, said in a Dec. 1 interview. “Kaya lang medyo masama na ang loob ng Presidente kasi nga (But the President is grudging because) he bent backwards, ang dami niyang binigay pati nga (He gave so much, even) Cabinet positions, but then the other side nagkaroon talaga ng (they started to have this) thinking na they can have their take,” Mr. Casiple said.

“In the meantime, ayaw nilang magkaroon ng talks na walang labanan (the NDFP-CPP-NPA side did not want to have talks without fighting)… talking while fighting, fighting while talking, which actually is the mode na pinipilit nila (that they have been insisting on) ever since, which led, as I’ve said, to nothing,” he added.

On July 19, a convoy of two unmarked vehicles carrying members of the Presidential Security Group (PSG) coming from Mr. Duterte’s hometown Davao City on their way to Cagayan de Oro City ended up in a gunfight with NPAs who, posing as military, set up a checkpoint in Arakan, North Cotabato.

Four PSGs were injured and a civilian auxiliary force member, who was not part of the convoy but happened to be in the area, was killed.

This would prove to be a point of no return for the formal peace talks.

Another incident in Mindanao on Nov. 9 — this time in Bukidnon wherein a four-month old baby in a private vehicle became a casualty of an NPA attack on a close-by police car that also left one officer dead — sealed the fiery President’s anger and resolve for war.

“Kung ganun kayo, tapos mag-giyera tayo, pati ’yung mga civilian idadamay natin, ’di ’wag na tayong mag-usap (If that is how you want it, then we go to war, and we compromise civilians, then let’s not talk anymore),” Mr. Duterte said in a media interview on Nov. 21 following an assembly of the League of Cities of the Philippines in Taguig City.

The CPP earlier issued a rare statement of apology for that attack, posting on Nov. 14 on its site philippinerevolution.com that it takes “full responsibility for the death of the infant and the wounding of two other civilians, and will take all measures possible to account for the resulting difficulties.”

But by Nov. 23, Mr. Duterte signed Proclamation No. 360 terminating the peace talks.

“It’s now war,” Mr. Casiple said.

What this means, he explained, is that since there had actually been no solid peace established yet, “what we’ll see is the intensification of offensives on both sides.”

BACKCHANNEL
Nonetheless, even with the exchanges of fire on the ground and verbal denunciations from both sides, backchannel talks actually continued in late Oct. to Nov.

Mr. Dureza hinted on this when he announced the cancellation of the negotiations on Nov. 22, a day before the actual signing of PN 360.

“This is an unfortunate development in our work for peace. Never before have we all reached this far in our negotiations with them,” he said.

NDFP’s Julieta de Lima, chairperson of the Reciprocal Working Committees on Social and Economic Reforms (RWCs-SER), confirmed this in a Nov. 23 statement, saying “unprecedented advances have already been achieved in forging agreements on urgently needed socio-economic reforms to alleviate mass poverty and resolve the roots of the armed conflict.”

Ms. De Lima said that four days earlier, the bilateral teams of the NDFP and the government’s RWCs-SER “initialed draft documents reflecting substantial agreements on agrarian reform and rural development, and on national industrialization and economic development. These were the result of a series of bilateral technical meetings” on Oct. 26-27, Nov. 9-11, and Nov. 16-17.

But Mr. Dureza pointed out that “Recent tragic and violent incidents all over the country committed by the communist rebels left the President with no other choice but to arrive at this decision.”

On the other hand, NDFP consultant Randy Felix P. Malayao, in a telephone interview on Nov. 12, asserted that the talks should have “no preconditions.”

“There must be a respect for past agreements and commitments, e.g. the release of political prisoners, the general amnesty for political prisoners. I think that is a vital requirement… and ano ba ang mahalaga sa talks ‘di ba (what is important in the talks)?… reforms that resolve the root causes of the armed conflict,” Mr. Malayao said, citing socioeconomic, political, and constitutional reforms.

“After which, we shall have cessation of hostilities… Sequential kasi ang agenda. Hindi pwedeng magkaroon muna ng (We cannot have a) ceasefire before the economic reform,” he added.


REVOLUTIONARY TAXES
For the administration, however, what could possibly change the President’s stance, according to Mr. Dureza, is if a “desired enabling environment” for peace is laid out, which means not just a halt to the NPA attacks against the military and police, but also “stopping all their extortion activities on the ground, among others.”

The banana industry in Mindanao, which accounts for the country’s second biggest agricultural export commodity and one of the NPA’s main extortion targets, supports an end to the talks.

“They’re bandits under the guise of political agenda,” Alexander N. Valoria, president of the Pilipino Banana Growers and Exporters Association (PBGEA), said in an interview in the first week of Nov.

“How can you negotiate with that? Unless you bring down the government,” Mr. Valoria said. “They (NPA) have to be defeated,” he added.

PBGEA Executive Director Stephen A. Antig, in the same interview, said the military believes that defeating the NPA does not simply mean deploying troops to fight, but to win over the communities as allies.

“The difficulty lies in the fact that we are in six regions and 15 provinces. It’s not that easy to implement (a security program). They’re (military) actually looking at the strategy that will not as much involve the physical aspect of containing this peace and order issue, but one that will include winning the minds of the community, who, according to them, is actually our first buffer,” Mr. Antig said.

The PBGEA officials acknowledged the existence of the so-called revolutionary taxes, “But we don’t talk about how much we pay, or are we paying or not. That depends on the policy of the company concerned,” according to Mr. Antig.

He did cite an estimate of at least P1.3 billion per year that is collected by the NPA from both small and big companies in various industries, as well as individual businessmen.

Mr. Sison, in a statement posted on Nov. 29 in the NDFP Web site, defended the collection.

He said the “taxes collected by the PDG,” referring to what he described as a legitimate “People’s Democratic Government,” are “small compared to that collected by the reactionary government.”

The CPP founder said the funds “are used mainly for the social and economic programs for the benefit of the people and secondarily for the subsistence and administration work of the cadres of the PDG and for the maintenance and expansion of the New People’s Army.”

Lt. Gen. Benjamin R. Madrigal, commander of the military’s Eastern Mindanao Command, disputes this saying the NPA uses the term “Rebolusyunaryong Buwis sa Kaaway na Uri (RBKU)”, which literary translates to revolutionary tax on the enemy kind.

“Meaning,” Mr. Madrigal said in mixed English and Filipino in an interview with BusinessWorld mid-Nov., “that if they collect from you, you are not friends, so whatever you do, even if you give, it does not mean you become friends. Tomorrow, your equipment and property could end up burned.”

At the beginning of December, the President signed the proclamation declaring the CPP and NPA as “terrorists’’ while reports of fighting from various parts of the country continued to flood in.

Mr. Bello earlier said the implication of such a declaration would be heat-sealing the closed talks, because the government “cannot negotiate with terrorists.”

The proclamation, in effect, puts the CPP-NPA in the league of the extremist Islamic State followers who took siege of Marawi City, and the Abu Sayyaf group notorious for its kidnap-for-ransom and seajacking activities.

“(I)t will come under the anti-terrorism law, mabigat na parusa doon (the penalties there are heavy). Hindi na (Not just) rebellion,” Mr. Casiple said, referring to Republic Act 9372, or the Human Security Act of 2007, which serves as the country’s main statute dealing with terrorism.

Mr. Dureza, in a Dec. 5 statement, said: “The next step is for the Secretary of Justice to file a petition for ‘proscription’ in court under the provisions of the Human Security Act for a judicial affirmation. Let’s await its outcome.”

For now, the communist guerilla grounds are set as battle zones, dimming what seemed at the auspicious start as a future legacy for Mr. Duterte as the president who built a path of nonviolence that led, finally, to peace with a 50-year old resistance. — Marifi S. Jara with reports from Arjay L. Balinbin, Rosemarie A. Zamora, and Maya M. Padillo

Takata recalls another 3.3 million air bags under US order

TAKATA Corp., the parts supplier that filed for bankruptcy after sparking the largest auto recall in history, called back 3.3 million air bags as part of a US order that scheduled repairs of the potentially deadly devices over several years.

The supplier identified at least 15 automakers that purchased the air bags, including Toyota Motor Corp., Honda Motor Co., General Motors Co., BMW AG and Tesla, Inc. Takata said it will work with the companies to develop a remedy for each of their vehicles, and urge consumers to get their air bags replaced.

Defective Takata inflators can explode in a crash and spray vehicle occupants with metal shards. The parts have been linked to 13 deaths in the US and hundreds of injuries, and mounting liabilities from the recalls pushed Takata to file for bankruptcy in June. Key Safety Systems, Inc., a supplier owned by China’s Ningbo Joyson Electronic Corp., plans to acquire the company.

Almost two-thirds of the 31.5 million US vehicles containing defective air bag inflators made by Takata remain unrepaired as of mid-September, according to a November report released by the independent monitor overseeing the recalls.

About 65 million inflators are set to be recalled by the end of 2018 under a National Highway Traffic Safety Administration plan to replace the parts in phases, scheduling the riskiest parts for repair first. — Bloomberg

Stocks to consolidate after last week’s records

By Arra B. Francia, Reporter

LOCAL EQUITIES are seen to take a breather this week after hitting three consecutive record highs in the first trading days of 2018.

 

The benchmark Philippine Stock Exchange index (PSEi) inched up 0.34% or 30.17 points to close at 8,770 last Friday. The index also managed to book an intraday high of 8,858.07 on the same day. 

Week on week, the index jumped 211.58 points or 2.47%.

The holding firms counter posted the largest increase last week, adding 3.8% followed by property’s 3% climb and industrials’ 2.4% increase.

Net inflows for the week stood at P240 million, thinner than the P1.13 billion recorded in the week prior. Value turnover meanwhile averaged at P9 billion during the three-day trading week.

The start of 2018 also saw a new high overseas, as the Dow Jones Industrial Average finished at 25,295.87, breaching the 25,000 mark for the first time last week. Other United States indices also closed on a positive note, with the S&P 500 index adding 0.70% or 19.16 points to 2,743.15 and the Nasdaq Composite index jumping 0.83% or 58.64 points to 7,136.56. 

“We go into [this] week with a lot of positive momentum after hitting new highs [last] week. We saw a bit of a correction on Friday which may continue into [this] week. There is nothing to worry about as this is a healthy correction after being up so much in the last few weeks,” Eagle Equities, Inc. Research Head Christopher Mangun said in a market note. 

Online brokerage 2TradeAsia.com said the market will be in consolidation mode after the series of highs, citing previous records. The company noted the market went on a four-month consolidation within the range of 7,123 to 7,375 from Jan. 10 to April 1, 2017 after jumping to 7,364 from a base of 6,564 on Dec. 23, 2016. 

“This could indicate a new pattern for the bourse if we were to use its recent history as basis. Following the strong ascent, the market could consolidate in the coming weeks, until sequel catalysts emerge to support the new wave,” according to a weekly market note by 2TradeAsia.com.

Analysts still see the effects of the Tax Reform for Acceleration and Inclusion (TRAIN) law propelling the market, coupled with the disbursement of funds for the government’s infrastructure push. 

“For now, views will be considered how other tax angles in TRAIN would net out consumers’ purchasing power, especially for key commodities consumed by the larger populace,” 2TradeAsia.com said. 

Eagle Equities’ Mr. Mangun noted that the government’s initiatives will push more money into the market, allowing the index to reach the 9,000 level “much earlier than expected.”

The market’s immediate support for the week is seen within the 8,650 to 8,700 range, while resistance could be between 8,800 and 8,850, analysts said.

Saudi Arabia confirms princes arrested over protest

RIYADH — Saudi Arabia’s attorney general on Sunday confirmed 11 princes had been arrested after protesting the kingdom’s austerity measures and would face trial after “disrupting public peace and order.” Saudi media on Saturday had reported the princes arrested after gathering outside Qasr al-Hokm, a historical palace in Riyadh, in protest against a government decision to stop paying the water and electricity bills of royals. They were also demanding compensation for a death sentence issued against one of their cousins, convicted of murder and executed in 2016, attorney general Saud al-Mojeb said. “Despite being informed that their demands are not lawful, the 11 princes refused to leave the area, disrupting public peace and order,” Mojeb said in a statement issued by the information ministry. “Following their arrest, they have been charged on a number of counts in relation to these offences.” The 11 are being held at the maximum security Al-Hayer prison, south of Riyadh. Saudi Arabia has introduced a string of austerity measures over the past two years to boost revenues and cut spending as the global slump in oil prices led to ballooning budget deficits. — AFP